Devices Neurology

 News Release - May 1, 2007

Cyberonics Announces Organizational Restructuring

Workforce Reductions Expected to Generate Significant Cost Savings Beginning This Fiscal Year

HOUSTON, May 1 (HSMN NewsFeed) -- Cyberonics, Inc. (Nasdaq: CYBX ) today announced that it has implemented an organizational restructuring designed to enhance efficiency and reduce the cost of ongoing operations.

The restructuring has resulted in approximately a 15% reduction in employee headcount. The approximately $1.3 million in costs associated with the reductions will be accounted for in the fourth quarter of fiscal 2007, which ended Friday, April 27, 2007. The workforce reductions are expected to result in direct annual savings exceeding $12 million beginning in fiscal 2008.

"With the distractions of the past year now behind us, the Board and management of Cyberonics are fully committed to creating shareholder value by returning the company to positive cash flow generation and profitability as quickly as possible," said Hugh M. Morrison, Chairman of the Board. "Our focus is squarely on reinvigorating growth of our core epilepsy franchise while continuing to rationalize our investment in the treatment-resistant depression (TRD) indication and capitalize on the value of the Company's substantial intellectual property assets."

"Given the difficult reimbursement environment for TRD, the Cyberonics management team and Board initiated a thorough review of the Company's business structure," said George E. Parker, Interim Chief Operating Officer. "We have created extraordinary awareness and acceptance of VNS Therapy for TRD, but with limited payer access, we have decided to reduce our spending in demand creation while we continue to grow the body of scientific evidence for the therapy. This restructuring, along with other cost savings measures, was necessary to return the Company to near-term positive cash flow and profitability. We begin fiscal 2008 with renewed confidence and enthusiasm and remain steadfast in our mission to improve the lives of people touched by epilepsy, depression and other chronic disorders that may prove to be treatable with our patented VNS Therapy."

ABOUT VNS Therapy AND CYBERONICS

Information on Cyberonics, Inc. and VNS Therapy(TM) is available at http://www.cyberonics.com and http://www.vnstherapy.com .

SAFE HARBOR STATEMENT

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology, including "may," "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," and "forecast," or other similar words. Statements contained in this press release are based upon information presently available to Cyberonics (the "Company") and assumptions that the Company believes to be reasonable. The Company is not assuming any duty to update this information should those facts change or should we no longer believe the assumptions to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, including without limitation, statements concerning near-term positive cash flow and profitability, refocusing our business on epilepsy, realigning our spending in the depression market based on the current reimbursement environment, enhancing the company's reputation with all of our stakeholders, helping improve the lives of people suffering from the disorders treatable with VNS Therapy, and building a company that Company employees and management will be proud to be part of. The Company's actual decisions, performance and results may differ materially. Important factors that may cause actual results to differ include, but are not limited to: continued market acceptance of VNS Therapy and sales of the Company's product; the development and satisfactory completion of clinical trials and/or market test and/or regulatory approval of VNS Therapy for the treatment of Alzheimer's disease, anxiety, or other indications; adverse changes in coverage or reimbursement amounts by third-parties; intellectual property protection and potential infringement claims; maintaining compliance with government regulations and obtaining necessary government approvals for new applications; product liability claims and potential litigation; reliance on single suppliers and manufacturers for certain components; the accuracy of management's estimates of future expenses and sales; the results of the previously disclosed governmental inquiries; the impact of restatement of the Company's financial statements or other actions that might be taken or required as a result of such inquiries or the review by the Audit Committee of the Company's Board of Directors of the Company's stock option grants, procedures, and practices, including a default under credit facilities or debt instruments; the potential identification of new material weaknesses in the Company's internal controls over financial reporting; risks and costs associated with such inquiries or review and any litigation relating thereto or to the Company's stock option grants, procedures, and practices (including the previously disclosed private litigation); uncertainties associated with stockholder litigation and other risks detailed from time to time in the Company's filings with the SEC. For a detailed discussion of these and other cautionary statements, please refer to the Company's most recent filings with the SEC, including its Form 10-K for the fiscal year ended April 28, 2006 and its Form 10-Q for the period ended January 26, 2007.

Source: Cyberonics

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